U.S. Federal Labor Relations Authority

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United States of America


In the Matter of





Case No. 04 FSIP 138



    Local 12, American Federation of Government Employees, AFL-CIO (Union), filed a request for assistance with the Federal Service Impasses Panel (the Panel) to consider a negotiation impasse under the Federal Service Labor-Management Relations Statute (the Statute), between it and the Department of Labor, Washington, D.C. (DOL or Employer).

    Following an investigation of the request for assistance concerning the transfer of DOL's payroll function to the National Finance Center (NFC),1/ the Panel determined that the matter should be resolved through single written submissions. The parties were informed that after considering the entire record, the Panel would take whatever action it deems appropriate to settle the matter, which may include the issuance of a Decision and Order.


    The Employer's mission is to foster and promote the welfare of the job seekers, wage earners, and retirees of the United States by, among other things, improving their working conditions and advancing their opportunities for profitable employment. The Union represents approximately 3,600 professional and nonprofessional employees who typically work as attorneys, accountants, auditors, program analysts, investigators, and in various support staff positions, at GS-3 through -15. The collective bargaining agreement (CBA) covering these employees was implemented in 1992 and remains in full force and effect until a successor agreement is negotiated.


    The parties disagree over whether: (1) to change the electronic fund transfer (EFT) payday from the first Friday after the close of the pay period to the second Monday after the pay period, and to continue the "pay-by-exception" system; and (2) the Employer should continue to send employees paper copies of their earnings and leave statements (ELS) at the address of their choice.


1. EFT Payday

    a. The Union's Position

The Union proposes the following:

The [EFT] payday shall remain the first Friday after the end of the pay period. The current [DOL] policy with respect to employee time cards that are open or in reconcile status at the end of the pay period will remain in place. Thus, DOL will continue the current practice of pay-by-exception, i.e., the employee's regular salary will be paid and the time card will be reconciled later.

The proposal should be adopted because the current payroll practices have worked well for over 10 years. For the Employer to fix something that is not broken "comes down to the axiomatic 'famous last words'." Further, moving the payday forward 3 calendar days "will cause some hardship for employees," primarily lower-graded employees and employees just beginning their careers with the Federal government. Similarly, abolishing the pay-by-exception policy "will result in missed paychecks and hardship for everyone."

    The Employer has not presented the Union with any "higher level authority," either directly or indirectly through its submissions to the Panel, requiring it to make changes to the payroll system. While DOL interprets the President's Management Agenda to require the transfer of its payroll function, "the Agenda is not based on any law, rule, or authority." In fact, the current delay in implementing the payroll conversion is evidence that DOL has considerable flexibility in the matter. The leaders of the labor organizations representing DOL bargaining-unit employees have written to the Secretary of DOL "expressing reservations about transferring payroll to the NFC," urging her to delay the transfer "until the NFC system could be shown to be superior to DOL's payroll system." They pointed out that only one of the six concerns previously raised by the Office of Inspector General involving this matter has been resolved. If the transfer had occurred on the date initially proposed, "some or all DOL employees might not have been paid in September or October." Finally, combining the "erratic" timekeeping system the Employer uses with NFC's "inflexibility" has the potential to cause payroll problems in the future.

    b. The Employer's Position

    The Employer essentially proposes to move the EFT payday from the first Friday following the close of the pay period to the second Monday following the close of the pay period, and to adopt NFC's policy with respect to pay-by-exception. In the Employer's view, the parties cannot be at impasse on this issue because the Union's proposal to maintain the status quo is nonnegotiable. In this regard, the decision to transfer the payroll functions to the NFC is the result of the E-government initiative that, among other things, requires the Government-wide consolidation and standardization of 22 payroll providers into 4 payroll providers. DOL had no discretion in selecting the payroll provider (NFC) or fixing the pay dates.

    NFC services more than 100 agencies with a total of over 550,000 employees. One of its requirements is that all of the employees be paid on the same Monday EFT, and that Thursday be the official payday. In responding to questions posed by DOL representatives, NFC stated that it is abiding by the EFT date established years ago by the Department of the Treasury, Financial Management Service. As to the Union's proposal to continue the "pay-by-exception" procedure, the NFC reiterated its position that it does not process pay for any employee for whom it does not receive a certified Time and Labor Report. Thus, the Panel should deny the Union's proposal concerning the change in payday and pay-by-exception because it is non-negotiable. In the alternative, it should order the parties to adopt the Employer's proposal on the basis of "efficient and effective government operations," and because, unlike the Union's proposal, it is consistent with the President's Management Agenda and the goal of "consolidating and standardizing the payroll system."


    After thorough consideration of the record developed by the parties on this issue, we conclude that the impasse should be resolved on the basis of the Employer's proposal. In our view, the benefits associated with the conversion of DOL's payroll system to the new service provider outweigh the relatively minor short-term inconveniences cited by the Union in opposing the change. The Union's assertions of negative impact mainly appear to be speculative, and it has failed to support its concerns with concrete evidence of problems that occurred when other agencies transferred to the NFC payroll system. Accordingly, we shall order the parties to adopt the Employer's proposal.

2.  Paper Copies of Earnings and Leave Statements

a. The Union's Position

The Union proposes the following wording:

The earnings and leave statement provided to employees shall contain in one single document all information the present earnings and leave statement contains and all information the pre-2002 earnings and leave statement contained regardless of whether it is issued by NFC or the Department. The Department shall forward all information currently provided to employees, such as their W-2s, to their mailing address regardless of whether it is the same as or different from their legal address.

The Panel should adopt its proposal because "as our society becomes more complex, individuals are required to maintain records at levels not previously contemplated." The Employer's proposal to eliminate paper ELSs and require employees to "hunt through [the NFC Personal Page] for data will make maintenance of those records next to impossible." The NFC payroll system is inferior to DOL's, and will not provide employees with information on the Employer's contributions for benefits, including the Thrift Savings Plan. Employees will have to search for this information elsewhere within the payroll system. Nor does NFC's electronic payroll system have the same flexibility as DOL's. For example, the DOL payroll system "can maintain separate legal and mailing addresses, whereas NFC can only maintain one."

    b. The Employer's Position

The Employer proposes that:

During the transition period through calendar year 2004 or 60 days after the implementation of the NFC, whichever is later, the Department will provide a paper copy of employees' earnings and leave statements to be sent to the employees' address of record. This transition period allows the employees the opportunity to familiarize themselves with the NFC Employee Personal Page. Employees can retrieve their earnings and leave statements through the Internet on the NFC Personal Page (earning and leave statements may no longer be available on Employee Express). Once retrieved, employees may either print a paper copy or save it to disk. When an employee cannot obtain an electronic copy of their earnings and leave statement, employees may request and obtain, through their servicing HR Office, a paper copy of their earnings and leave statement.

Its proposal should be adopted because it is in accordance with the E-government initiative requiring the Federal government to move forward with electronic processing. The proposed transition period "would allow employees the opportunity to familiarize themselves with the NFC Personal Page and [they would] be able to retrieve their earnings statements electronically through NFC." In addition, DOL is seeking to establish consistency so that all employees would have the same access to their ELSs. The union representing 69 percent of its bargaining-unit employees has accepted the Employer's proposal. Agreeing with Local 12 to continue different earnings and leave procedures indefinitely "would not only incur added expense for [DOL] but is inconsistent with the President's Management Agenda." Finally, NFC is currently scheduled to develop a web-based time-and-attendance system. Once the system is available, DOL will transfer that function to NFC. Since the Employer will no longer have the capability of providing paper ELSs, it cannot agree to continue to provide them indefinitely, as the Union proposes.


    Having carefully considered the evidence and arguments presented by the parties on this issue, we shall order the adoption of the Employer's proposal to resolve the dispute. Its approach complies with the President's Management Agenda, gives employees adequate time to familiarize themselves with NFC's Personal Page, and establishes a consistent procedure for all DOL employees to receive their earnings and leave statements.


    Pursuant to the authority vested in it by the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of proceedings instituted under the Panel's regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel, under 5 C.F.R. § 2471.11(a) of its regulations, hereby orders the following:

1. EFT Paydays

   The parties shall adopt the Employer's proposal.

2. Hard Copies of Leave and Earnings Statements

   The parties shall adopt the Employer's proposal.

By direction of the Panel.

H. Joseph Schimansky
Executive Director

January 7, 2005
Washington, D.C.

[1]/   The conversion initially was planned for the fall of 2004 but has been delayed until April 2005.